August 11, 2022 | Reading Time: 3.5 min
What in The Bear Market is Going on?
By: Tanner Horstmeyer, IAR
IT ACTUALLY HAPPENED. The S&P recently delved into bear market territory which means a 20% decline from its most recent high. We had a strong sense that markets were going to feel like a rollercoaster and well, here we are.
What got us here? Supply chain issues, a global pandemic, nations at war, and an inflation rate increasing prices rising faster than they have in over 40 years. Now we have a Federal Reserve that is sounding more Hawkish and needing to attack this inflation beast head on. Originally, rates were to increase .25% which turned into .50% and in May 2022 increased again to .75% which was the most aggressive hike in nearly three decades. It’s clear that the Federal Reserve’s efforts to cool inflation haven’t borne fruit yet, and it’s making investors uneasy and nervous. Their move in raising rates this aggressively will hopefully yield relief from rising prices but also means that the cost of borrowing will go up, which could dent business and consumer spending.
So now what happens?
Well, mostly likely we’re going to continue to see volatility over the upcoming weeks and months as investors continue to stomach the fact that we’re nearing a recession (or in one depending on who you ask) and handling these aggressive rate hikes.
Now we have to sit back and wait to see the impact of these continued rate hikes and how they impact inflation data. If the inflation data comes back lower and shows it going down, that could allow the Fed to avoid more aggressive and continued hikes down the road and give them some wiggle room.
Like I said, at this point it’s a game of wait and see.
Should you be scared and what can you do?
Careful, most certainly. Fearful? Well, that all depends. With the Survey of Consumer sentiment index hitting the lowest level on record which spans back to the mid-1970’s, it’s understandable why fear is running rampant. We know for investors as a whole, this season hasn’t been “fun” by any means, but it has definitely been a lot more stressful for those that have no comprehensive plan in place.
The comprehensive planning we offer our clients allows them to have what we call a SWAN plan — A Sleep Well At Night plan – which is crafted to prepare for every season. If that’s not
the experience you currently have, or if you don’t yet have a financial plan in place, that’s where we come along. Having a comprehensive financial plan can provide you with peace of mind, security for what may lie ahead…so you can thrive in every season!
The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Tanner Horstmeyer, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.